The Federal Reserve System and the New York State Banking Department have ordered Daiwa Bank Ltd. to curtail its trading activities because of the bank's failure to promptly report a $1.1 billion trading loss.

In a joint release Monday, the two supervisory agencies set deadlines for a reduction in activity and ordered Daiwa bank to conduct a comprehensive audit of its activities through a third party within 10 days. The order requires Daiwa and its New York branch to submit a plan within 30 days of the audit to correct any deficiencies.

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